Everything employers need to know about Philippine employment and labor laws

The Philippines has unique labor laws that differ from other countries when it comes to leave benefits, social security, and overtime pay requirements. Unlawful hiring practices can lead to fines or even up to three years’ imprisonment. So compliance is crucial.

But how do you keep track of the most important parts of Philippine employment law? Consider this your starter guide, giving you a bird’s eye view of the most important mandates to keep in mind.

The 6 employment types in the Philippines

The Labor Code of the Philippines governs labor relations and is managed by the Department of Labor and Employment (DOLE). It covers the following employment types:

• Regular employment: Workers who perform necessary, full-time labor important for a business over the course of an indefinite time period. Employees are presumed regular after their probationary employment period unless proven otherwise. 
• Probationary employment: Refers to the trial period after an employee is hired, when an employer can judge fit in the hopes of bringing the worker on full time barring any setbacks. Probationary periods generally last about six months or 180 calendar days. 
• Fixed-term employment: When workers contractually agree to finish a task within a finite time period.
• Seasonal employment: Applies to agricultural workers and others who are temporarily laid off in the off-season, but can expect reinstatement when their services are needed again in the next cycle. 
• Project employment: Workers who work on a one-off task. Their contract ends as soon (co-terminus) as the specific project is completed. 
• Casual employment: When an employee engages in a task not considered crucial or ‘incidental’ to the main tenets of the business. Once a casual employee works for a year, they can transition into a regular employee.

Keep in mind that the Labor Code doesn't apply to government employees.

Conditions of employment in the Philippines

The Labor Code of the Philippines also specifies key conditions of employment for private-sector employees in the country, including:

Regular working hours and overtime

The standard workweek in the Philippines is eight hours a day, five working days a week. Employees are entitled to extra compensation of at least 25% of their normal wage for additional working hours. If the employee works overtime during a holiday, overtime pay equals 30% of their regular wage.

Rest days and holidays

If a Filipino employee works six consecutive days, employers are required to offer 24 consecutive hours of rest. Filipino employees get 130% of their normal pay for working on a scheduled rest day (known as rest day premium pay). 

The Philippines recognizes 18 public holidays that come in two separate forms. During “regular holidays,” employees get a paid day off, and are entitled to double their pay if called upon for work. If a statutory holiday falls on a weekend, employees are typically given a substitute holiday (usually on the first working day following the statutory holiday).

The Philippines also has “special non-working holidays,” in which employees get a day off but aren’t entitled to pay. If an employee does work during this type of holiday, they’re entitled to a 30% pay bump.

Leave benefits

In addition to time off for statutory holidays, Filipino employees are entitled to the following leave benefits:

• Service incentive leave (SIL): Employees get a minimum of five paid days off per year after completing a full year of service. It is common practice for employers to offer Vacation Leaves and Sick Leaves in the Philippines, for as long as they exceed the minimum number of leaves (five) as required by law. Unused Sick Leaves are convertible to cash by the end of the year, with a maximum of 10 unused leaves considered tax-free. 
• Maternity leave: The Philippines grants 105 days of fully-paid leave to employees becoming mothers and an additional 15 days paid leave if the mother qualifies as a solo parent regardless of mode of delivery, with an optional extra 30 days leave without pay. 
• Paternity leave: Employees becoming fathers are entitled to seven days of paid leave. 
• Parental leave for single parents: Single parents get seven days of paid leave a year. Note that single or solo parents under Philippine law are those who are registered under the Department of Social Welfare and Development (DSWD) and are granted a solo parent ID. 
• Violence Against Women and their Children (VAWC) Leave: Female employees who either themselves or their children were victims of violence get 10 days paid annual leave.
• Special Leave Benefit for Women: Women employees who got surgery to treat gynecological disorders get two months’ paid leave. 

Night shift differential

Employees are also entitled to a 10% additional compensation—known as the night shift differential—for each hour worked between 10 p.m. and 6 a.m.  

13th month pay

Employers are required to provide non-management employees in the Philippines with an extra month’s salary by Christmas Eve, with some employers choosing to release it in biannual installments. Employers need to file a compliance report by mid-January to confirm the 13th month payment compliance. 

This extra pay is pro-rated for employees who’ve resigned, retired, were recently hired, or female employees who were on maternity leave over the course of the year. 

Health and safety standards

The DOLE establishes mandatory Occupational Safety and Health Standards that protect Filipino employees from injury, sickness, and other safety hazards on the job. It gives workers the right to know of workplace hazards, refuse unsafe work, report accidents, and wear protective equipment. Employers have to register their business with the DOLE and provide necessary training to deal with emergencies and other dangerous situations. Penalties for violating any of the government standards range from PHP 20,000 to PHP 50,000 per violation. 

No at-will employment in the Philippines

Philippine law is largely pro-worker. Employees have a “right to security of tenure” and can only be dismissed for “just” or “authorized” causes as defined in the Labor Code of the Philippines. 

At-will employment isn’t recognized in the Philippines, and there are three ways an employee can be involuntarily terminated: 

• Termination of employment for just cause. The Labor Code lists serious misconduct, gross and habitual neglect of duties, fraud, and criminal offenses as just causes for terminating a Filipino employee.
• Termination of employment for authorized cause. Employees can be dismissed for business-related reasons outside their control like redundancy, retrenchment, the company ceasing operations, or disease. Employers need to provide proof of financial losses to justify termination because of retrenchment. Employees terminated for authorized causes are eligible for separation pay.
• Termination of employment based on serious diseases or health conditions. Employers can terminate employees with debilitating health conditions whose wellbeing (or the wellbeing of co-workers) is put at further risk on the job. Employers need a note from a doctor or other health authority indicating that the disease is incurable and too severe for the employee to continue working. Employees who are terminated for health reasons are entitled to separation pay.

For the brass tacks on Philippine termination requirements—including notice periods and wrongful dismissal claims—consult our guide.

Employers have to follow due process before officially dismissing an employee. For just cause, that means providing terminated employees at least two notices, a notice to explain (detailing the grounds for dismissal) and a notice of termination.  The employee must be given a chance to respond to the notice to explain in writing, and the employee can request that an administrative hearing be held. In authorized causes, employers are required to provide a 30-day advance written notice to both the employee and the Department of Labor and Employment (DOLE). 

Trade union rights for Filipino employees

The Labor Code gives Filipino employees a say in their conditions of employment through collective bargaining agreements. These agreements span five years, and have a two-month “freedom period”after they expire where they can’t be upended. The agreements can have both economic provisions—like information on wages, night shift differential pay, and service incentive leave—and non-economic provisions about terminations, working conditions, and disciplinary action. 

Non-disclosure agreements (NDAs) and their legal standing

NDAs can protect a company’s proprietary information such as trade secrets, personal information of clients, and business plans. By law, an NDA is considered a legally binding contract in the Philippines. Courts have historically upheld them as enforceable legal documents so long as they comply with other laws of the Philippines and aren’t used to cover up criminal behavior. 

NDAs should clearly indicate what the confidential information is, who can and can’t share it, and establish terms for how long it lasts. It can be included as a confidentiality clause in an employment contract. 

How to stay compliant with Philippine labor laws

Failing to comply with labor rights in the Philippines and DOLE employee rights can result in steep penalties and reputational damage. Here are some tips for avoiding noncompliance.

Stay up-to-date with legal changes

Employment laws can be fluid, constantly changing based on new political administrations, economic trends (e.g., minimum wage requirements can adjust based on inflation and cost of living), and cultural values. So make sure you’re staying up-to-date with DOLE rules and regulations for employees. Regular audits, reviews, and compliance training can keep your processes above board. 

Avoid employee misclassification penalties

Employees work exclusively under the direct supervision of an employer for an indefinite time period and are entitled to benefits. Contractors are self-employed, work autonomously for a fixed time period, and are generally not entitled to benefits. Conflating these worker categories can result in misclassification penalties. 

If you’ve misclassified the employment relationship, penalties can include back pay, benefits reimbursement (with interest), court-ordered damages of up to PHP 500,000, and possible jail time for companies who don’t make the necessary contributions to the Philippines’ social security programs.

Partner with compliance experts

The safest way to monitor compliance is by commissioning Philippine employment law experts to review work conditions, answer questions, and help you acclimate to any changing legislation that affects your business. While you can do this by hiring an in-house legal or tax expert, if you’re headquartered outside the Philippines, you can also use an EOR, which gives you access to on-call experts to help you navigate the country’s legal  landscape.

Philippine labor laws FAQs

What is the minimum wage in the Philippines?

There is no nationally set minimum wage requirement in the Philippines. Different rates are instead set by wage boards and vary across regions.

Here are the current daily minimum wage rates as of 2024, per the DOLE:

What are the overtime laws in the Philippines?

The standard Philippine workweek is 40 hours. Each year, employees have 12 regular holidays, six additional non-working holidays, localized non-working holidays, and 52 rest days. They’re also entitled to 24 consecutive hours of an unpaid rest period for every six consecutive working days. 

Employees are entitled to extra compensation of at least 25% of their normal wage for additional hours of work. If the employee works overtime during a holiday, they get an additional 30% of their regular wage. Filipino employees get time-and-a-half for working on a scheduled rest day and twice their normal wage for working on a public holiday. If they perform overtime work during those days off, they get an additional pay hike. 

Employees are also entitled to a 10% additional compensation— known as the night shift differential—for each hour worked between 10 p.m. and 6 a.m. 

What are the allowed break periods under Philippine labor laws?

According to the Labor Code, Filipino employees are entitled to a 60-minute unpaid meal break. Employees can also take short rest breaks, ranging from five to 20 minutes, in addition to their daily meal breaks. These short breaks are normally paid. 

What are the required employee benefits in the Philippines?

The Philippines has a Social Security System (SSS) that funds most of its benefits, which all employees are entitled to. This includes:

• Retirement pay
• Sick leave
• Disability
• Maternity leave (solo parents get an extra 15 days’ full pay)
• A “death benefit” given to beneficiaries of a deceased employee
• Unemployment insurance

The Philippines also has a public health insurance program, known as PhilHealth, that covers all full-time employees. 

Employees also get five days’ service incentive leave for every year they’ve worked. New fathers get seven days’ paternity leave. And female employees can get up to two months’ special leave for gynecological surgery. The country has 12 regular holidays where employees get a paid day off and non-working holidays where employees get a day off without pay. 

Lastly, Filipino employees are entitled to an extra month of paid salary (known as 13th month pay). 

For more information on mandatory benefits in the Philippines, read our complete guide.

Hire and onboard Filipino employees with Rippling

If you're hiring employees, independent contractors, or remote workers in the Philippines, you need Rippling. 

Rippling allows you to manage HR, IT, and Finance in one unified platform. We make it easy to onboard, manage, and pay employees and contractors around the world—in a single system that helps keep you compliant with local employment laws and regulations.

This blog is based on information available to Rippling as of October 8, 2024.

Disclaimer: Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide or be relied on for tax, accounting, or legal advice. You should consult your own tax, accounting, and legal advisors before engaging in any related activities or transactions.